Management

Taming the Malignant Masters

Massachusetts Governor Deval Patrick announced this week that he’s throwing out or modifying 150 different rules and regulations and calling for the review of hundreds of others.

Massachusetts Governor Deval Patrick is trying to slash government red tape so small businesses in his state can flourish. If he succeeds, and these enterprises grow, they’d then be smart to listen to Peter Drucker and start reducing the red tape elsewhere: inside their own shops.

By announcing this week that he’s throwing out or modifying 150 different rules and regulations and calling for the review of hundreds of others, Patrick joins his counterparts in New Jersey and Maine, Chris Christie and Paul LePage, in waging war on nuisance requirements. (Should businesses really be ordered to obtain separate state and local permits for a sewer connection?) “Let’s focus on what’s necessary and stop doing what’s not,” Patrick said in a video sent to thousands of state employees.

Drucker, who lent his counsel to Vice President Al Gore’s Reinventing Government initiative during the Clinton administration, would certainly have appreciated the effort. But he also believed that, in some sense, a profusion of government red tape is simply inevitable. “Government is a poor manager,” Drucker wrote. “It is, of necessity, concerned with procedure, for it is also, of necessity, large and cumbersome. … It has no choice but to be ‘bureaucratic’—in the common usage of the term.”

Yet this didn’t mean that Drucker wasn’t intent on seeing red tape get cut. He suggested that the scissors, however, largely be aimed elsewhere: at business itself.

“The businessman in the large corporation who complains the loudest about bureaucracy in government,” Drucker asserted in his 1967 book The Effective Executive, “may encourage in his own company the growth of ‘controls’ which do not control anything, the proliferation of studies that are only a cover-up for his own unwillingness to face up to a decision. . .”

Indeed, Drucker thought that among the most important things for any company to master is the proper use of reports, procedures, and forms.

“Reports and procedures are necessary tools,” he wrote in his 1954 landmark, The Practice of Management. “But few tools can be so easily misused, and few can do as much damage. For reports and procedures, when misused, cease to be tools and become malignant masters.”

Drucker went on to describe three errors that companies often make in this area. The first is to treat reports as “instruments of morality.” As Drucker noted, “Right conduct can never be established by procedure.”

A second widespread mistake, Drucker wrote, “is to consider procedures a substitute for judgment.” Many situations are non-routine and can’t be handled by preestablished procedure. Nevertheless, Drucker cautioned, “our civilization suffers from a superstitious belief in the magical effect of printed forms.”

The third—and most dangerous—trap is to use reports and procedures “as an instrument of control from above,” as Drucker put it. “The common case of the plant manager who has to fill out 20 forms to supply accountants, engineers or staff people in the central office with information he himself does not need is only one of thousands of examples,” he added. When this happens, “the man’s attention is directed away from his own job” and even his boss is soon “misdirected, if not hypnotized, by the procedure.”

Even worse is when people are evaluated on how diligently they attend to all this paper shuffling, rather than on the results they achieve. “A man must never be judged by the quality of the production forms he fills out,” Drucker wrote, “unless he is the clerk in charge of these forms.”

In general, the best way to avoid such blunders is to keep reports and procedures as simple as you can and to use them as infrequently as possible. To this end, Drucker advised that companies put every form “on trial for its life” at least once every five years.

Drucker once worked with an old utility company, where the reports and forms, “luxuriating like the Amazon rain forest,” were threatening to “choke the life” out of the place. So he had the senior executives suspend every report and allow only the return of those that managers demanded after two months of operating without them. Three-quarters of the paperwork was never seen again.

If Massachusetts is willing to try something like this, what about your company?